When using survey data to develop compensation structures and to price jobs:
- Look for surveys that provide meaningful data that you need, such as industry-specific data or data based on company revenue or operating budget.
- Don’t rely too much on a single data source, as that can provide a false measure of the market.
- Blend as many data sources as appropriate—generally at least three if possible—to come up with a market consensus number for a particular job.
- Remember that compensation surveys are meant to be reference points or guidelines, not absolute statements of what compensation should be. Ultimately, HR professionals have to make business decisions on how to interpret the data.
- Look at how many companies are submitting matches for a particular job in a survey. The larger the sample size and the more companies that are reporting for each job, the better sense you will have of what the market is doing.
- Adjust compensation decisions based on geography and company size. Surveys often provide data cuts based on organization size, revenue or operating budgets as well as a regression formula to calculate the relationship among size, geography and compensation levels.
The author is a New Jersey-based business and financial writer.